Production subsidy planned atHollywood event Rivals make it a tough year for Nike
DalianWanda Group plans to unveil a subsidy scheme to attract Hollywood filmmakers Niketo Incits newis finally multibilliondollargetting scuffed up. studio in the eastern ChineseOne of the city longstandingof Qingdao, darlings a personof withWall direct Street knowledge— praised forof theits plan advertisingsaid. clout and productThe chairman innovationof the— has property-to-entertainmenthad a rough year. The shares conglomerate,are down 13 Wang percent Jianlin,in 2016 as is analysts expected andto unveil investors the fret scheme,over market-sharewhich offers lossesto subsidizeto Adidas 40 AG percentand Underof production Armour costs,Inc in at thean event United hosted States,in Losits Angeleslargest region. onMonday evening.
NikeThe had subsidy been will rollingbe jointlysince the funded recessionwith the— even local in Qingdaothe face government,of challenges said from the Adidas person, and who Under asked Armour not — to with be the identified.stock averaging annual gains The of subsidy26 percentwill apply over to the feature past sevenfilms and years. televisionBut 2016 shows.has been Costs a eligible different for story,the rebatewith its include shares stage sinkingand equipmentwhile the broaderrentals, set market constructionhits record and highs.local accommodation.On one flank, Under ArmourA Wandahas attacked spokesmanits lucrative declined basketball-shoeto comment. business with A the Qingdao success of governmentits Stephen Curry spokesmanline. On said the he other, was Adidas not familiarhas drawnwith the away plans. some of its casual Wanda’s business billionaireby teaming chairman up withis buildingrapper a Kanye footprint West in and Hollywood reinvigorating through retroa series styles of like deals, Superstar.part of China’sThe German growing company investment also in has the taken US a entertainmentpage from the Nike industry. playbook and turnedThe Boost, companya performancehas bought running-shoe line, into a monster lifestyle hit.
“There is more competition from brands that didn’t have the cachet they do now,” said Chen Grazutis, an analyst at Bloomberg Intelligence. The rivals JurassicWorldhave also hurt producer Nike’s ability Legendary to charge Entertainmentpremium prices, and promptingUS cinema chainit to AMC offer Entertainmentsome items for less, Holdings.he said. Wanda also Exacerbatingsigned a marketingNike’s struggles and cofinancingis shoppers’ deal increasingwith Sony preferencePictures, a for unit classicof Japan’sand casual styles over performance products designed for actual athletic use, according to Matt Powell, an analyst for researcher NPD Group.
For several years, the entire running-shoe industry was helpedSony Corp.by people who bought high-techWith the running Qingdao shoes studio, for everydayWanda will wear, be not competingto train for half with marathons.dozens of US Now states thoseand consumerscountries includingare turning Britain to casualand New sneakers Zealand like that Adidas’shave Stan lured Smith filmmakersline. That out shiftof Hollywood not only helps Nike’s current largest adversary, but also threatens to saddle Nike with new rivals such as casual-footwear makers, including Steve Madden Ltd, that don’t even have performance businesses, Powell said. with tax incentives and “It rebates.lets brands that don’t have Incentivesa performance typically strategyrange fromin the 15 door,” percent Powell to said. 45 percent Of of utmost certain interest production to costs, investors accordingwill be howto Niketax incentive performs in specialists,North America.making Throughout a turbulent period in China and slowdowns in Europe, Nike’s home base has reassured investors of its dominance. The company increased annual sales 10 percent or more from fiscal years 2011 to 2015. But growth slowed to 7.4 percent in the fiscal year through May.
Shoe retailer Finish Line Inc only added to doubts about Nike’s home market when it reported second-quarter results by the end of last month. The US-based chain said sales of Nike’s premium basketball shoes fell in the period, and CEO Sam Sato sang the praises of Nike’s competition. He called the performance of Under Armour’s latest Curry shoes “tremendous” and said Adidas remained “on fire.”
Research and discussions with industry sources “point to Adidas and Under Armour continuing to gain share at Nike’s expense,” Lyon said in the note. He cut his 12-month price target on the stock to $52 from Wanda’s$56. subsidy among the “Our world’s concerns highest. on Nike are mounting,”The Qingdao Lyon studiosaid. “Historyis part of hasa large shown theme that park brand and shiftsreal estatetake a developmentlong time to materialize,designed to and become similarlya Chinesea long versiontime to ofHollywood.revert back.”
Adidas AG’s advertising billboard stands together with a Nike Inc store in Beijing. Actress Nicole Kidman shakes hands with fans at a red carpet event promoting Wanda Group's Oriental Movie Metropolis project in Qingdao, Shandong province, in this file photo.